Here’s to Their Health

A majority of today’s 30-year-olds may live in the moment, but they’re looking to the future. With mounting drug and dental costs, the questionable sustainability of Canada’s healthcare system and media coverage of yet another large organization slashing its postretirement benefits, these savvy Canadians know only too well the value of their own health and the importance of their health benefit plans—and their employers’ participation in both.

According to Benefits Canada’s survey of Canadian 30-year-olds, 61% agree that their employer has an obligation to assist them in maintaining a healthy lifestyle. Where a baby boomer or a traditionalist(born before 1945)would say health is her responsibility, this is not the case for this age group. “Increasingly, Gen Xers are saying a healthy me is part of my relationship to the workplace. My employer should help me be a healthy person because I’ll be a better worker,” says Lynne Lancaster, a generational expert with Bridge-Works in Sonoma, Calif. It’s not surprising then, that the survey also indicated 36% said their number one choice would be to see their employer offer a fitness centre, fitness subsidy or fitness program in their workplace.

Tim Clarke, benefits consulting practice leader for Eastern Canada, with Hewitt Associates in Toronto, is encouraged by this 61%. “We do hear a lot from employers that they would love to be able to encourage employees to stay healthier and are struggling for what’s the right incentive and venue to do that. I think employers philosophically often would like to go in that direction, but one of the barriers is lack of employee interest or employee apathy of people viewing this not as being something they want their employer to be involved in.”

This is not the case for Delta Hotels in Toronto. Adrienne Guest, director, people and wellness, of the hotel chain, thinks employers should be involved. “The employee spends most of [her] waking hours with us.” Employers not only have to provide a safe work environment, she says, but also consider employees’ health. “And that’s where a benefit plan is important.”

BEST-LAID BENEFIT PLANS

Of the 382 employed respondents in the survey, 81% ranked 100% coverage of traditional health benefits(drug and dental)as an important feature of their employee health benefit plans. Guest says Delta’s coverage is 80%, but full coverage is certainly an issue. Although Delta has a rather young workforce (about 40% of its employee base is under age 30), Guest says at the Whistler resort, for example, the housekeeping department— comprised of mostly young women with families—wants coverage at 100%.

The importance placed on drug and dental coverage in the survey is not surprising to Marg French, principal at Mercer Human Resource Consulting in Toronto. These 30-year-olds are at a stage where they’re building equity, she says. “They’re planning families or starting families and mortgaging homes. [Drug and dental] are the most valuable in terms of the value of the benefits offered by employers.”

Still, Shawn O’Brien, senior consultant in the health strategies consulting practice with Aon Consulting in Toronto, was surprised to see that if given a choice, 82% would prefer their employer to provide a benefits plan over the equivalent in cash. However, he’s quick to offer another explanation. “It’s maybe from an administrative standpoint, that an equal amount of cash isn’t as attractive to them. They would have to either get an individual plan or continue to pay for their claims out of pocket.”

While it wasn’t surprising that 30-yearolds value drug and dental—whether single, married or with children—consultants and providers were surprised by the importance placed on postretirement health benefits. Of those employed, 72% said that benefits coverage in retirement was an important feature in their employee health benefits plans. And 20% said they would most like to have postretirement health benefits included in their benefits coverage at work.

Sadly, not all employers offer retiree benefits, and even those that do are finding ways to reduce, and in some cases eliminate, postretirement benefits for new employees. According to a 2006 Hewitt Associates survey, of 218 Canadian employers, just 45% offer postretirement benefits to new employees.

If most companies don’t offer postretirement benefits, why are they so important to 30-year-olds who, in all likelihood, are 30 to 35 years from retirement? Consultants and providers can only guess, but attribute the importance to a number of factors including retired parents who are struggling to pay drug claims, media coverage of companies’ changing postretirement benefits—and even the public healthcare system. O’Brien says this age group is becoming more aware and concerned for the sustainability of the public drug system. “They know that they’ll be a strain on the publicly funded drug benefits when they retire.” “They’re knowledgeable in the present; they’re skeptical about the future,” says Lancaster.

French, however, offers the eye-opening reality of the work world. “If it’s true that employers would expect employees to change jobs more than once or twice over a working lifespan, then 30-year-olds to be looking for postretirement benefits from their current employer kind of flies in the face of that, doesn’t it?” True, but if the talent shortage is also another soon-to-be reality in the workplace, employers may have to consider benefits when courting the best and the brightest for jobs.

MAKING A DIFFERENCE?

Interestingly, 65% said a health benefits plan was an important factor in deciding to stay or leave their current employer. “When someone’s looking to move from one employer to the other, it’s not simply salary anymore,” says O’Brien. “It’s how is the benefits package and how robust is the benefits package that they’re offering.”

Marilee Mark, vice-president, marketing, group benefits, with Manulife Financial in Waterloo, Ont., sees awareness in postretirement benefits from 30-year-olds as positive. “It’s a good-news message in that it’s on their radar.” Although employers might not necessarily offer the more traditional postretirement benefits plans, Mark says they can think about which alternatives(such as employee-paid retiree plans or savings vehicles to be used for retirement health expenses)to offer employees that would give them these benefits.

Despite their knowledge and concern for health benefits, respondents rated health spending accounts(HSAs)relatively low (43%)in terms of importance. Clarke was surprised by the low interest. “We do hear from employees of all generations that spending accounts are very attractive because they allow them to customize and tailor benefits to what they need.” However, Brigitte Parent, senior vice-president for group benefits, with Sun Life Financial Canada, thought the low number could be a reflection of lack of exposure(many companies do not offer HSAs)and poor education of plan members. “What I find quite often is that the HSA is not necessarily well understood.”

So how can employers devise benefit plans to meet 30-year-olds’ needs? Parent says plans should include lifestyle-focus type of benefits such as fitness centre subsidies, recreational sports programs or paid sabbaticals, which were reflected in the survey. Employers will also need to offer choice and flexibility in their plans through such vehicles as HSAs, taxable spending accounts and optional benefits. “They’re going to have to provide means to offer benefits that are going to meet somebody’s unique needs,” says Mark.

Meeting His Specs

On Wednesday evenings, 30-year-old Nick Hudson can be found running a quiz night at the Crown & Anchor, his local pub in Brampton, Ont. “It’s like a question/answer team trivia thing,” he says. “It’s a whole dollar to play.”

But Monday to Friday nine-to-five, Nick works full-time at Woodbridge Foam as a quality supervisor, ensuring that outgoing auto parts are meeting all the customers’ specs. Though he’s been with the company for about eight years now, he’s still realistic about employment trends. “Another 30 years seems a long time in the current market to stay with one employer,” he says. “This being relatively early in my career, I’m just not sure with the trends that I would be here for another 35.”

For now, however, Nick is content. With the company’s solid benefits package(80% drug and 100% dental up to $1,000 per individual per year, excluding emergencies)as well as a $500 per year health spending account(HSA), life’s pretty good. “It compares very well with what other people I know have.” And with a young family(he and his wife have three boys), there will be plenty of cavities to fill and medications to prescribe.

As for the HSA , Nick uses it for massage therapy about twice a year—but not to relieve stress. “Just to promote my general well-being,” he says. “I tell some people and they think I’m weird.” Weird or not, it’s a nice perk. And though currently just expensing massages, the HSA did find another use a few years ago.

In July 2005, as he was loading up the van for a family camping trip, he stepped down and landed on his ankle. “I had to go the whole weekend with this massively swollen ankle. It wasn’t good. It took a lot of beer to water the pain.” To ease the pain, Nick bought a specialized ankle support (not covered under his plan). “It was quite pricey, so it was nice to have the option to purchase that under this account.”

Generally in good health now(“As far as I know,” he says), Nick remains unfazed by high drug and dental costs in his retirement years.(Woodbridge Foam does not offer postretirement health benefits.)“I have parents that are retired now, and they seem to get along okay without an extended health plan.” Retirement seems an eternity from Wednesday trivia nights.

“There’s more than me in the boat,” he says, encompassing a broader scope of the problem. “I think if there’s that many people that are having a hard time making it, then the government would respond and change the set-up accordingly.” Well, at least there are some things you can still get for a dollar.

Benefits: What “Y” Wants

1. Let’s get physical. Just over a third of 30-year-olds would like their employer to provide a fitness centre, a fitness subsidy or fitness programs at their workplace.

2. They want luxury. Four fifths say they want 100% coverage of both dental and prescription drugs.

3. These 30-year-olds want to stay healthy and fit through proper eating habits, taking lunch and working out.

4. Just like Gumby, this age group loves flexibility. These employees value the ability to move one benefit from one area to another based on their needs.

5. Almost two thirds agreed that their employers have an obligation to help them maintain a healthy lifestyle.

6. Just under one fifth of 30-yearolds want to have maternity/ parental leave as a top-up in their benefits coverage.

7. With rising prescription costs, it’s no wonder drug benefit plans were second in importance to these workers.

8. These 30-year-olds want to keep their own teeth in old age. Dental coverage topped the list in importance in their benefits.